US bond selloff resumes despite Treasury intervention

US bond prices fell once again on Thursday, despite Treasury Secretary Scott Bessent’s pledge to potentially intervene further to curb borrowing costs. The three major US indices all dipped, following a down day in leading European markets. Oil prices surged over two percent amid ongoing uncertainty over the US-Iran standoff in the Strait of Hormuz.

In response to the recent surge in 30-year yields to near two-decade highs, the Treasury announced plans to double its sovereign bond purchases. However, analysts noted skepticism that this plan would be effective, as yields ticked higher again on Thursday. Treasury Secretary Bessent stated that the department possesses a "big toolkit" to address rising yields, which they perceive as disconnected from financial conditions.

He suggested that increased bond purchases beyond the recently announced scale could be among the measures taken. The analyst Arun Sundaram from CFRA Research noted that the bond purchases are viewed more as "bandaids" for deeper economic issues. He pointed to high oil prices due to the Iran war, increased spending on artificial intelligence, and a high level of US government issuance due to the budget deficit as contributing factors.

The Dow fell the most, with Walmart reporting the lowest US sales growth in six years, leading to a 9.2 percent drop. European bourses also retreated, while Asian stocks rallied following strong performances from tech giants Apple, Microsoft, and Amazon. Seoul's stock market rose nearly six percent, driven by a 12.7 percent surge in SK Hynix and a more than nine percent increase in Samsung.

Investors are now awaiting next week's central bankers' meeting in Jackson Hole, Wyoming, hoping for insights into Fed Chair Kevin Warsh's views on future interest rate policies.